Question 1

Financial statement users rely on ________ footnote information when comparing ________.

Accepted Answer

A) accounting policies,net income from prior years 
B) contingencies,receivables balances 
C) accounting policies,two or more firms in the same industry 
D) employee policies,firms in different industries 
E) both A & C 
A) accounting policies,net income from prior years 
B) contingencies,receivables balances 
C) accounting policies,two or more firms in the same industry 
D) employee policies,firms in different industries 
E) both A & C

Question 2

To mitigate cognitive biases,accountants must be as ________ as possible.

Accepted Answer

A) intelligent 
B) clever 
C) objective 
D) subjective 
A) intelligent 
B) clever 
C) objective 
D) subjective

Question 3

Very few amounts reported on the financial statements are based upon assumptions.

Accepted Answer

A) True 
 B)False

Question 4

Joe Woods is a first year accountant.Why might he fail to exercise good judgment?

Accepted Answer

A) He feels pressure to impress the boss. 
B) Decisions related to complex transactions can seem overwhelming to a new accountant. 
C) He doesn't really like his job. 
D) All of the above. 
A) He feels pressure to impress the boss. 
B) Decisions related to complex transactions can seem overwhelming to a new accountant. 
C) He doesn't really like his job. 
D) All of the above.

Question 5

Complete the following table.Identify which cognitive bias is represented in each example.

Accepted Answer

The answer of Complete the following table.Identify which cognitive bias...

Question 6

Auditors should exercise ________ to minimize management bias.

Accepted Answer

A) common sense 
B) ratio analysis 
C) professional skepticism 
D) interrogation techniques 
A) common sense 
B) ratio analysis 
C) professional skepticism 
D) interrogation techniques

Question 7

________ are systematic deviations from rationality which can impact judgment on a daily basis.

Accepted Answer

A) Cognitive biases 
B) Relational biases 
C) Emotional biases 
D) Subjective biases 
A) Cognitive biases 
B) Relational biases 
C) Emotional biases 
D) Subjective biases

Question 8

________ occurs when managers manipulate financial information and misrepresent the firm's financial position and performance.

Accepted Answer

A) Earnings management 
B) GAAP 
C) Judgment 
D) Decision-making 
A) Earnings management 
B) GAAP 
C) Judgment 
D) Decision-making

Question 9

Complete the following table.Give a definition and example of each of the cognitive biases listed (be original).

Accepted Answer

Answers will vary fo

Question 10

The first step in the accounting research process is to identify the issue.

Accepted Answer

A) True 
 B)False

Question 11

Kramerica Corporation is in the research and development stage with a new product.Their accountant is unsure how to account for these costs.In which topic grouping would he find more information about R&D?

Accepted Answer

A) 6XX 
B) 7XX 
C) 8XX 
D) 9XX 
A) 6XX 
B) 7XX 
C) 8XX 
D) 9XX

Question 12

In ASC 450-20-35-2,2 represents the ________.

Accepted Answer

A) topic 
B) paragraph 
C) section 
D) subsection 
A) topic 
B) paragraph 
C) section 
D) subsection

Question 13

TNT,Inc.had a board meeting to discuss future investment opportunities.Joe was a loud proponent of investing in Proton Corporation,so much so that nobody else got a word in edgewise.Many board members didn't really think investing in Proton was a good idea,but agreed to invest in Proton in order to keep Joe happy,and get the meeting over with.The board is exhibiting ________.

Accepted Answer

A) availability bias 
B) anchoring bias 
C) groupthink bias 
D) confirmatory bias 
A) availability bias 
B) anchoring bias 
C) groupthink bias 
D) confirmatory bias

Question 14

Being more confident than your abilities or experience level warrant is an example of ________.

Accepted Answer

A) the overconfidence bias 
B) the availability bias 
C) the confirmatory bias 
D) the anchoring bias 
A) the overconfidence bias 
B) the availability bias 
C) the confirmatory bias 
D) the anchoring bias

Question 15

Accountants use judgment when ________.

Accepted Answer

A) researching and interpreting standards 
B) recognizing and contemplating standards 
C) estimating and recording economic events 
D) all of the above 
A) researching and interpreting standards 
B) recognizing and contemplating standards 
C) estimating and recording economic events 
D) all of the above

Question 16

Why would an accountant engage in financial accounting research?

Accepted Answer

A) When they need to determine the appropriate reporting treatment for a transaction. 
B) When a given transaction requires judgment. 
C) Both A & B 
D) Neither A nor B 
A) When they need to determine the appropriate reporting treatment for a transaction. 
B) When a given transaction requires judgment. 
C) Both A & B 
D) Neither A nor B

Question 17

Accounting judgment occurs when managers manipulate financial information and misrepresent the firm's financial position.

Accepted Answer

A) True 
 B)False

Question 18

Complete the table.Identify the steps in the applied financial accounting research process.

Accepted Answer

The answer of Complete the table.Identify the steps in the...

Question 19

When accountants use judgment to interpret standards it often detracts from the usefulness of the financial statements.

Accepted Answer

A) True 
 B)False

Question 20

Complete the following table.Provide a brief description of the literature included for each level of the U.S.GAAP Literature Hierarchy.

Accepted Answer

The answer of Complete the following table.Provide a brief description...

Exam 3: Judgment and Applied Financial Accounting Research

Financial statement users rely on ________ footnote information when comparing ________.

To mitigate cognitive biases,accountants must be as ________ as possible.

Very few amounts reported on the financial statements are based upon assumptions.

Joe Woods is a first year accountant.Why might he fail to exercise good judgment?

Complete the following table.Identify which cognitive bias is represented in each example.

Auditors should exercise ________ to minimize management bias.

________ are systematic deviations from rationality which can impact judgment on a daily basis.

________ occurs when managers manipulate financial information and misrepresent the firm's financial position and performance.

Complete the following table.Give a definition and example of each of the cognitive biases listed (be original).

The first step in the accounting research process is to identify the issue.

Kramerica Corporation is in the research and development stage with a new product.Their accountant is unsure how to account for these costs.In which topic grouping would he find more information about R&D?

In ASC 450-20-35-2,2 represents the ________.

Being more confident than your abilities or experience level warrant is an example of ________.

Accountants use judgment when ________.

Why would an accountant engage in financial accounting research?

Accounting judgment occurs when managers manipulate financial information and misrepresent the firm's financial position.

Complete the table.Identify the steps in the applied financial accounting research process.

When accountants use judgment to interpret standards it often detracts from the usefulness of the financial statements.

Complete the following table.Provide a brief description of the literature included for each level of the U.S.GAAP Literature Hierarchy.

The Financial Reporting Environment

Financial Reporting Theory

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Financial statement users rely on footnote information when comparing .